UPS Doubles Down on Dividend Despite Transformation Charge
United Parcel Services (UPS) has reaffirmed its plan to pay around $5.4 billion in dividends this year, subject to Board approval, despite absorbing an $891 million transformation charge.
The company's quarterly dividend has remained steady at $1.64 per share since early 2025, with the payout ratio ballooning to 224.50% last quarter.
Despite the high payout ratio, UPS stock still yields 6.56%, above its trailing average of 5.68%. The company's target price is set at $149 for year-end 2030 by TIKR's mid-case model, implying a 48% total return and a 10% annualized rate.
UPS' CFO Brian Dykes said the company would maintain its dividend payout despite the transformation charge, which was mainly tied to employee separation costs from the Driver Choice program. The program aimed to eliminate lower-yielding Amazon volume and remove related expenses, resulting in a $4.5 billion reduction.